Newcastle Municipality’s adjustment budget is unfunded and unrealistic

FF Plus

Newcastle Municipality’s adjustment budget is unfunded and unrealistic
Newcastle Municipality’s adjustment budget is unfunded and unrealistic

The FF Plus voted against the adjustment budget of the Newcastle Local Municipality (Charlestown, Newcastle) during a council meeting because it is unfunded and also because the proposed financing thereof is unrealistic.

Over the last few years, the party has cautioned the council many times that an unfunded budget is unlawful in terms of the Municipal Financial Management Act.

The admission by the strategic executive director, Sam Nkosi, and the Mayor, Dr Ntuthuko Mahlaba, that the budget is still not funded serves as proof that there is no real drive to turn the serious financial predicament in which the Municipality finds itself around.

The FF Plus raised the following concerns about the proposed funding of the budget:

1. Operating revenue:

• The Municipality’s liquidity was under a lot of pressure this past year. The operating revenue was once again adjusted downward with R58,8 million to R2,130 billion, in accordance with the various streams of income, of which assessment rates was the highest at R47,7 million.
• Most of the other services were also adjusted downward, which will have a further negative effect on the debtor-creditor relationship seeing as the cash revenue is not sufficient to cover the current creditors.

2. Operating expenses:

• The total operating expenses were adjusted upward with R7,0 million from the initial budget of R2,388 billion to R2,395 billion, which puts a lot of pressure on the Municipality’s insecure financial footing.
• Payments to creditors can only improve once the cash-flow situation improves. If the debt, which amounted to a staggering R806 million in December 2020, is not paid off, the creditors to whom R406 million is owed will not be paid on time. This will cause businesses to refuse to do business with the Municipality.
• The reduction in the Municipality’s wage bill will have only a small impact on the problem seeing as it is mostly as a result of vacant positions, which must be filled again under normal circumstances. Overtime payments are much too high and the total expenditure must be cut back to bring future expenses in line with income.
• The greater demand for large-scale water provision is the result of water wastage in the eastern part of Newcastle, a problem which is not being effectively addressed. As long as water restrictors are not connected to the water meters of non-paying consumers in Newcastle East, the payment factor will not improve. It is unsustainable to only collect payments from consumers for a mere 48% of the water that is supplied to them.

The culture of non-payment for services provided is the ANC’s doing and as long as it is not eradicated, the Newcastle Municipality will not be able to perform its constitutional duty towards the community by providing them with the services that they pay for.

The ANC is unable to govern any municipality successfully and, therefore, it must be replaced during the upcoming local government elections by a competent government that puts residents’ interests first.

In the meantime, the FF Plus is engaging with the council on a regular basis to propose plans to increase the Municipality’s revenue and cut back on expenditure. The party will continue to fight against the incompetence of the ANC management for the sake of all residents.

Read the original article in Afrikaans by Lourie Bosman on FF Plus